Question

.  In order to use the EOQ formula, what must be TRUE?

        A.  Ordering cost/order must be constant

        B.  Carrying cost/unit must be constant

        C.  Purchase price/unit must be constant

        D.  All of the above must be true

Answer 1

The answer is D.

Explanation:

The EOQ model assumes that , All the ordering cost per order and Holding cost per unit which are also called as carrying cost per unit both remains constant in using EOQ formula and it is one of the limitation of using EOQ model.

The EOQ model also assumes that, purchase price per unit of material will remain unchanged irrespective of size of order.

Therefore, In order to use EOQ formula ordering cost per order, Carrying cost per unit and purchase price per unit must be constant.

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